A Post-Gazette Editorial—The U.K. and France take tough steps on spending

Posted by Kendall Harmon

France, the United Kingdom and the United States, among other countries, face a need to erase or reduce budget deficits to address a longer-term problem of growing national debt.

The economies of Portugal, Italy, Greece and Spain are an example of what can happen if countries don't address these issues sooner rather than later.

The U.K. and France have taken draconian, unpopular steps to tackle the problem, but the United States so far is avoiding the issue. The Republicans are babbling on about cutting the deficit and reducing the debt, but, when asked where specific cuts can be made, offer nothing. The Democrats indicate they may understand the problem better, but, on the eve of the midterm elections, they cite the danger of cutting government expenditures when the economy is in recession, even though economists claim it isn't....

There may be reason to believe that after the U.S. elections next week, the Obama administration and Congress, whatever its coloration may be by that time, will address the American version of this pressing problem. Tempting though it may be for Washington's leadership to pretend otherwise, a $1 trillion-plus deficit and a soaring $13 trillion debt simply cannot be ignored.

I have a bigger cut. How about cancelling any more work on the border fence? That is a total waste of money—it won’t stop anyone from entering the country illegally or the flow of drugs into the country.

According to information available from the NPR website, local radio station money comes from the following sources:

According to information available from the NPR website, local radio station money comes from the following sources:

32.1% Individual contributions

21.1% Business contributions

13.6% University funds

10.1% Corporation for Public Broadcasting funds

9.6% Foundation money

5.6% Federal, state, and local government funds

7.6% Other

At first glance, this distribution of funds seems to confirm that public radio’s support does not come in large amounts from the direct allocation of tax moneys. After all, 5.6% is not a gigantic portion of the budget, is it? But let’s look more closely. That 10.1% that comes from the Corporation for Public Broadcasting is 99% provided by—you guessed it—the federal government. Those university funds, whenever they are provided by a public university, represent taxpayer-provided dollars. We can safely assert that three out of four university-supported stations are publicly funded, which means that more than 10% (three-quarters of that 13.6%) is taken from the taxpayer’s pockets.

So far, we find that NPR member stations count on direct or indirect taxpayer money for some 25% of their funds—and that’s before we consider some of the largest portions of their budgets.

Obviously the support by individuals, businesses, and foundations does not constitute taxpayer funding, right? Not so fast. These donations are tax-deductible; thus, they are subsidized by the government. Granted, not every gift is actually reflected on an individual or business tax return, and not all of those that are itemized wind up offsetting high marginal tax rates. Still, it is reasonable to believe that on average, these gifts result in deductions at the 25% tax bracket. Since these three categories add up to roughly 64% of station funds, we can reasonably argue that 16% of that money (64% x 0.25) is subsidized by the tax code.

In the end, then, local NPR affiliates derive something like 41% of their funding from taxes, either directly or indirectly.

What about the entity that generated all the buzz for firing Juan Williams? Interestingly, despite their conflicting 2% and 3% claims, the NPR website says, “We receive no direct federal funding for operations.” Of course, that sort of statement leaves open the possibility of receiving direct federal funding for other purposes. What are those? They don’t volunteer that information easily. What they do point out prominently is that the biggest source of money is from member stations. Local stations pay dues and fees for the programs they rebroadcast. This money, recorded as Station Programming Fees (40%), Membership Dues (1%), and Distribution Services (8%), accounts for nearly half of NPR’s funds.

Why is this significant? You do recall that some 41% of local station money came from taxpayers, right? If 50% of funding comes from money that is 40% derived from taxes, then another 20% of NPR’s budget comes, indirectly, from taxpayers. Twenty percent! That’s a long way from the 2%-3% figures, isn’t it?

The next huge chunk of NPR income comes from “Sponsorships.” These are the things that, in any other media outlet, would be called advertisements. We could argue that sponsorship money is tax-deductible and therefore partly taxpayer-funded, but, lest we look like double-standard-wielding lefties, we would have to make the same argument for the ads that car companies run on ABC and CBS. Let’s face it: virtually every large corporation in America enjoys some form of government largesse. That’s what happens when government tentacles reach into all portions of our lives.

On the other hand, there is much more clarity when we look to the 10% “Grants and Contributions” category that represents direct taxpayer gifting (most prominently by way of the Corporation for Public Broadcasting) and indirect taxpayer support by way of tax deductions. Is it reasonable to say that half of that 10% comes in one way or another from taxes? I think so, but I’ll settle for saying that this category adds just 3% to the total. This brings our total of taxpayer support for the entire NPR budget to around 23%.

Given that only 89% of the NPR income pie comes from external sources (the rest coming from investment returns), it is not unreasonable to assert that more than 25% of NPR funds from outside sources actually comes from taxpayers. That’s not an overwhelming portion of the budget, but it’s a long way from two to three percent.

I have no love for NPR. For what it’s worth, I have no love for the Democratic party as currently organized or health care reform as passed. However, that this thread devolved into a rant about NPR is a precise illustration of the point the editorial is making—there is no proportion between the political rhetoric and the problems. Whatever a body thinks about NPR (in my case, not much, so let’s agree to defund it), it’s simply irrelevant to the problem under discussion.

Well the point is that the government seems to be unable to cut anything.

And that includes wasteful items in the conservative agenda, like the border fence, the war on drugs, the defense budget.

For example, even when the defense department wants to cancel a defense contract or close a military base the Congressmen and Senators (of either party) block the move.

And we have curious fiscal conservatives like Joe Barton patting himself on the back for voting agains the stimulus bill and health reform bill also praising the ground breaking a new clinic in his district—funded by grants from the stimulus and health bills. And, of course, although he is a long term Washington insider incumbent, his constituents will vote for him in November because he votes against “wasteful spending” and works for federal spending projects in his district.

Br. Michael, if tax deductions are indirect government support of NPR, then we must also admit that tax deductions are indirect support of churches. Or is your proposal to eliminate tax deductions to all charitable not for profit organizations including churches, private schools and universities, etc.?